TECHNICAL, COST AND ALLOCATIVE EFFICIENCY IN THE HUNGARIAN DAIRY FARMS

Krisztián Kovács () and István Szücs ()
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Krisztián Kovács: University of Debrecen, Faculty of Economics and Business, Institute of Applied Economic Sciences, Debrecen, Hungary
István Szücs: University of Debrecen, Faculty of Economics and Business, Institute of Applied Economic Sciences, Debrecen, Hungary

Annals of Faculty of Economics, 2020, vol. 1, issue 2, 293-303

Abstract: The general aim of the research was to explore the main indicators of the dairy sector in Hungary, and then define and systematize their efficiency and the factors relevant concerning dairy farms. Moreover, the objective is to introduce the most commonly used methods for measuring technical efficiency, which can explore hidden reserves within the dairy sector. To achieve the research objective, first the main indicators of the industry will be introduced, which will be explained in the first part of the literature section. The Hungarian dairy sector production trends and indicators where mainly came from FAOSTAT, EUROSTAT, KSH (Hungarian Central Statistical Office) and AKI (Research Institute of Agricultural Economics) databases. For my assessment, I will use the most reliable and comprehensive domestic agricultural economics database, the AKI- FADN (Farm Accountancy Data Network) database. In accordance with my objective, based on the database, a representative sample was selected in my analyses to represent the national dairy sector. More than 6800 data points were analysed in the different DEA models, which includes data from about more than 950 dairy farms in Hungary. Based on the secondary database (FADN), I created a technical efficiency inputs in four main economic areas (current assets, fix assets, human resources and livestock) which were characterized by using dairy farms efficiency differences of different size, year and regional categories. The model input variables comes from Hungarian FADN database. I confirmed that the used efficiency methods for measuring complex efficiency level were higher in my sample in the case of the large-sized farms than for small and medium-sized farms. The average technical efficiency of the Hungarian dairy sector during the examined 10 years was 64.6%, which means that the farmers can scale down their inputs with 35.4%, without changing the level of output (efficiency reserve). Large and small farms regarding the livestock number are more efficient (93.3%) than the medium sized farms (83.0%) and the small sizes farms (65.8%) maybe, because the medium and small farms are mixed profile farms.

Keywords: DEA; technical efficiency; cost efficiency; allocative efficiency; dairy farms; Hungary (search for similar items in EconPapers)
JEL-codes: Q12 Q13 (search for similar items in EconPapers)
Date: 2020
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Persistent link: https://EconPapers.repec.org/RePEc:ora:journl:v:1:y:2020:i:2:p:293-303

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